1 month ago
9884
Trump said the U.S. will cut tariffs on Indian exports from 25% to 18%, after a call with Modi where they agreed on a new trade deal. He posted on Truth Social that the lower tariff would start “effective immediately.”
This ends months of tension that started when Trump punished India for buying cheap oil from Russia during the war in Ukraine.
India depends on imports for nearly all its oil. Back in August, Trump added a 25% penalty on top of an existing 25% tariff, pushing total duties to 50%, one of the highest rates in the world.
Trump said this was because India was “helping fund Moscow’s war machine.” After Modi agreed to stop buying from Russia, Trump said he would take the penalty off.
India cuts Russian oil, Trump drops penalty tariffs
Trump said they talked about trade, Ukraine, and oil. He told Modi the U.S. was ready to sell more oil, and even brought up Venezuela.
After the call, U.S. ambassador Sergio Gor confirmed India had agreed to cut Russian oil. That was Trump’s condition. With that, the extra 25% charge was gone. From now on, only the reduced 18% will apply.
This whole thing froze trade talks that started last year. India’s economy got hit hard, especially jobs in shrimp, textiles, and jewelry. Trump’s tariffs made their exports too expensive. But some industries were left alone.
Pharma was one of them. India supplies almost half of the U.S.’s generic drugs. Those weren’t touched. Electronics exports also got through without extra duties.
Trump also said India would “eliminate tariffs and non-tariff barriers” on American goods. On top of that, he claimed India would start buying over $500 billion worth of U.S. energy, tech, and farm products. “Buy American,” Trump said. But people aren’t buying it.
Analysts don’t believe India will spend $500bn on U.S. goods
Pratik Dattani, head of the think tank Bridge India, said the number doesn’t make sense. “India only bought $41.5 billion in goods from the U.S. last year,” he said. “Trump says that’s going to jump to $500 billion? Not possible.” Total trade between the two countries was $212 billion in 2024. That includes services, not just goods.
Even if India cuts back on Russian oil, it’s not likely to stop completely. India has bought a lot of cheap Russian crude since the war began in 2022. Dattani said they’ll reduce it, but won’t cut it out fully. Their relationship with Moscow is too old and too deep.
Trump’s deal came right after India made trade agreements with the EU and the UK. That timing wasn’t random.
With other countries locking in deals, Trump needed to do something or risk being shut out. He called Modi, they talked, and the U.S.-India trade reset was back on.
India still has one of the highest trade deficits with the U.S., $45 billion in 2024. And the country keeps its own tariffs high to protect local businesses. That’s always annoyed Trump. But this new deal gives both sides something. India gets lower tariffs. Trump gets to say he’s tough but fair.
Modi posted on X: “Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18%. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement.”
The post ended with praise for Trump’s “leadership for peace” and a promise to grow the partnership. Trump posted right back, saying Modi would stop buying from Russia and “buy much more from the U.S., and potentially Venezuela.”
If you're reading this, you’re already ahead. Stay there with our newsletter.
English (US)